THE TAX-EXEMPT BOND FUND OF AMERICA
SEMI-ANNUAL REPORT
for the six months ended February 28, 1997
[The American Funds Group(r)]
The Tax-Exempt Bond Fund of America
[cover: Map outline of continental United States of America, superimposed on
the names of the various states, superimposed on a larger map of the
continental states, with each state individually outlined]
THE TAX-EXEMPT BOND FUND OF AMERICA(r) seeks a high level of federally tax-free
current income, consistent with the preservation of capital, through a
diversified portfolio of municipal bonds.
The fund invests primarily in state, city and public authority bonds that
are issued to provide funding for projects such as airport modernization,
pollution control, waste disposal, hospital expansion, education facilities,
housing development and highway improvements. The fund gives investors the
opportunity to earn tax-free income through a well-diversified portfolio
managed by proven professionals.
INVESTMENT HIGHLIGHTS
through 2/28/97
6-month total return +5.16%
(income plus capital changes, with dividends reinvested)
12-month total return +5.44%
(income plus capital changes, with dividends reinvested)
Tax-free distribution rate for February 5.00%
(income return only, reflecting maximum sales charge)
Taxable equivalent distribution rate 8.28%
(for February, assuming a 39.6% federal tax rate)
SEC 30-day yield as of February 28 4.49%
(reflecting maximum sales charge)
For current yield information, please call toll-free: 800/421-0180.
Fund results in this report were computed without a sales charge unless
otherwise indicated. Here are returns, with all distributions reinvested,
through March 31, 1997 (the most recent calendar quarter), assuming payment of
the 4.75% maximum sales charge at the beginning of the stated periods:
<TABLE>
<CAPTION>
Average Annual
Total Return Compound Return
<S> <C> <C>
10 Years +87.20% +6.47%
Five Years +35.22% +6.22%
One Year +0.65% -
</TABLE>
Sales charges are lower for accounts of $25,000 or more. The fund's 30-day
yield as of March 31, 1997, calculated in accordance with the Securities and
Exchange Commission formula, was 4.54%. The fund's distribution rate as of that
date was 5.04%. The SEC yield reflects income the fund expects to earn based on
its current portfolio of securities, while the distribution rate is based
solely on the fund's past dividends. Accordingly, the fund's SEC yield and
distribution rate may differ.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS. SHARE PRICE AND RETURN
WILL VARY, SO YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE SHORTER THE TIME
PERIOD OF YOUR INVESTMENT, THE GREATER THE POSSIBILITY OF LOSS. FUND SHARES ARE
NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED OR GUARANTEED BY, THE U.S.
GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, OR ANY OTHER AGENCY, ENTITY OR PERSON. Income may be subject to
state or local income taxes. Certain other income, as well as capital gain
distributions, if any, are taxable.
FELLOW SHAREHOLDERS:
The first half of The Tax-Exempt Bond Fund of America's 1997 fiscal year was
marked by two distinct trends in bond prices. Early in the period confidence
that inflation was not gaining momentum spread through the bond market and
investors bid bond prices moderately higher. Prices slid the last three months
of the period but the market's early strength helped your fund earn solid
returns and produce a steady stream of tax-free income.
For the six months ended February 28, the value of your holdings in the
fund rose 5.2%, assuming you reinvested your dividends, as most investors do.
That was marginally ahead of the 5.1% total return earned by the unmanaged
Lehman Brothers Municipal Bond Index.
During the period, the fund paid monthly dividends totaling 32 cents and a
capital gain distribution of 3.5 cents (which included a short-term capital
gain of 1.5 cents). Investors who took their dividends in cash saw the value of
their holdings rise 2.4% and had a tax-free income return of 2.7% (5.4%
annualized). This is equivalent to an annualized taxable return of 8.9% for
taxpayers in the 39.6% federal tax bracket.
RISING PRICES
The rising prices at the beginning of the fiscal year last September were a
change from earlier in 1996 when government economic reports showed
manufacturing capacity rates rising, wages increasing and unemployment falling.
Such figures often foreshadow higher inflation, and investors feared that the
Federal Reserve Board would raise short-term rates in a pre-emptive strike to
keep inflation in check.
Rates hit a peak in June, but by late summer inflation was still subdued
and the economy, while healthy, was not overheating. Although bond prices
dipped in the winter, they were still higher at the end of the six-month period
than at the beginning.
As interest rates have declined, investors seeking higher income have
begun looking longer and harder at bonds rated a notch or two below AAA, the
highest rating possible given by Standard & Poor's Corporation. This search for
higher yield and a general narrowing of the difference in yield between higher
and lower rated bonds have been beneficial for your fund.
In 1993 the fund's investment policies were changed to allow an increased
portion of the portfolio (up to 35%) to be invested in bonds rated BBB and
lower. BBB is the lowest rating of "investment-grade" bonds. (Bonds with
ratings lower than BBB are considered high-yield, high-risk and are often
referred to as "junk bonds.")
We have gradually built up the portion of the fund's noncash assets
invested in BBB to 27.7% of assets, relying on our intensive research efforts
to find good opportunities in this segment of the market. The fund has 6.2%
invested in bonds with ratings below BBB.
We believe this flexibility has helped us take advantage of more and
better market opportunities. In the recent six months, we were able to benefit
from the increased demand for lower rated bonds, which drove up their prices
relative to higher quality bonds.
POLITICAL STABILITY
This past calendar year was a politically stable one in the United States.
President Bill Clinton was re-elected, and the Republicans maintained their
majority in both houses of Congress.
The long-term consequences of certain policies debated in the election,
such as the shifting of some federal government responsibilities to the states
and cities, remain unclear. While these changes may affect some municipal
bonds, the impact on your fund's holdings may not be great. The Tax-Exempt Bond
Fund of America invests primarily in bonds issued for specific projects which
generate revenues independent of the political process.
As we write this letter, the outlook for interest rates is uncertain.
After the end of the fiscal period, the Fed raised the federal funds rate (the
rate commercial banks charge each other on overnight loans) by 0.25%, but it is
unclear if more rate hikes will follow soon.
We will, of course, continue to monitor closely the Fed's actions,
political changes in the nation's capital, and the overall health of the
economy. We will do everything we can to continue providing you with a
rewarding investment experience.
We look forward to reporting to you again in six months.
Cordially,
[/s/ Paul G. Haaga, Jr.]
Paul G. Haaga, Jr.
Chairman of the Board
[/s/ Abner D. Goldstine]
Abner D. Goldstine
President
April 18, 1997
LIPPER RANKINGS
Based on the total return of comparable general municipal debt funds tracked by
Lipper Analytical Services
through March 31, 1997
<TABLE>
<CAPTION>
<S> <C>
Lifetime (since October 31, 1979)* 8th out of 27 funds
10 Years 28th out of 65 funds
Five Years 17th out of 103 funds
One Year 37th out of 228 funds
</TABLE>
*Fund's actual inception date was October 3, 1979.
Lipper rankings do not reflect the effects of sales charges and are calculated
on a month-end basis.
WHY TAX-FREE INVESTING IS WORTHWHILE
The table below is based on the current federal tax rates. To use this table,
find your estimated taxable income to determine your federal tax rate. Then
look at the right-hand column to see what you would have had to earn from a
taxable investment to equal the fund's 5.0% tax-exempt distribution rate in
February.
Because of tax increases in recent years, many high-income investors are
finding that their returns on taxable fixed-income issues have to be even
higher to match those currently offered by tax-exempt municipals. For instance,
a couple with a taxable income of $160,000 faces a federal tax rate of 36.0%.
In this bracket, the fund's current 5.0% distribution rate would be equivalent
to a return on a taxable fixed-income investment of 7.8%. Investors in the
highest bracket (39.6%) would need a taxable distribution rate of 8.3% to equal
the fund's tax-exempt distribution rate.
FEDERAL INCOME TAX RATES
<TABLE>
<CAPTION>
The fund's 5.0% tax-
exempt distribution
rate in February/2/
Current is equivalent to a
Your Taxable Income Federal taxable distribution
Single Joint Tax Rate/1/ rate of:
<S> <C> <C> <C>
$0 - 24,650 $0 - 41,200 15.0% 5.9%
24,651 - 059,750 41,201 - 99,600 28.0 6.9
59,751 - 124,650 99,601 - 151,750 31.0 7.2
124,651 - 271,050 151,751 - 271,050 36.0 7.8
Over 271,050 Over 271,050 39.6 8.3
</TABLE>
/1/ The federal rates are marginal rates. They do not include an adjustment for
the loss of personal exemptions and the phase-out of itemized deductions that
are applicable to certain taxable income levels.
/2/ The fund's distribution rate in the table is based on offering price and
therefore reflects the effects of the maximum sales charge on the initial
investment. It is not a projection of future results. Such results will reflect
interest rate levels, changes in the value of portfolio securities, the effects
of portfolio transactions, fund expenses and applicable sales charges.
<TABLE>
THE TAX-EXEMPT BOND FUND OF AMERICA
Investment Portfolio, February 28, 1997
(Unaudited)
[chart]
Geographic Breakdown
<S> <C> <C>
New York -- 12.49%
California -- 11.34%
Illinois -- 8.49%
Michigan -- 8.28%
Washington -- 6.76%
Pennsylvania -- 5.25%
Other States -- 42.74%
Cash & Short-Term Securities -- 4.65%
[end chart]
[chart]
Aaa/AAA -- 32.54%
Aa/AA -- 18.28%
A/A -- 15.33%
Baa/BBB -- 27.66%
Below investment grade 6.19%
[end chart]
Principal Market
Amount Value
(000) (000)
Tax-Exempt Securities Maturing in More than
One Year - 95.35%
Alabama - 0.43%
Daughters of Charity, National Health System,
5.25% 2015 $4,000 $3,808
The Industrial Development Board of the City of
Mobile, Solid Waste Revenue Refunding Bonds (Mobile
Energy Services Co., LLC Projects), Series
1995, 6.95% 2020 2,500 2,658
Alaska - 1.62%
Housing Finance Corporation:
Insured Mortgage Program Refunding Bonds, 1990
First Series, 7.80% 2030 5345 5459
Collateralized Bonds (Veterans Mortgage
Program), Series 1992A-1, 6.75% 2032 4600 4751
Municipality of Anchorage:
1995 General Obligation Refunding General Purpose
Bonds, Series B, FGIC Insured, 6.00% 2012 2895 3126
Municipal Light & Power, Senior Lien Refunding Electric
Revenue Bonds, MBIA Insured, Series 1996, 6.50% 2014 5000 5626
City of Valdez, Marine Terminal Revenue Refunding
Bonds (BP Pipelines Inc. Project), Series 1993B,
5.50% 2028 6000 5665
Arizona - 0.48%
State Transportation Board, Subordinated Highway
Revenue Bonds, Series 1992B, 6.50% 2008
(Prerefunded 2002) 1850 2055
The Industrial Development Authority of the City
of Scottsdale, Hospital Revenue Refunding Bonds,
Scottsdale Memorial Hospitals, Series 1996A,
AMBAC Insured:
6.50% 2005* 2270 2483
6.50% 2006* 1200 1319
6.50% 2007* 1290 1418
California - 11.34%
General Obligation Bonds, 6.75% 2002 5000 5521
Various Purpose General Obligation Bonds,
6.75% 2006 1000 1134
Health Facilities Financing Authority,
Hospital Revenue Bonds (Downey Community Hospital), Series 1993,
5.75% 2015 4990 4882
Public Works Board, Lease Revenue Bonds:
California Community Colleges, 1994 Series B
(Various Community College Projects):
6.75% 2005 2505 2810
7.00% 2007 1315 1474
Department of Corrections, State
Prison-Lassen County (Susanville), 1993 Series D,
5.20% 2007 2760 2771
Statewide Communities Development Authority:
Children's Hospital of Los Angeles, MBIA Insured,
6.00% 2008 1715 1852
Kaiser Permanente Medical Care Program, Semi-Annual
Tender Revenue Bonds:
Series A, 7.00% 2018 1900 2048
1985 Tender Bonds, 5.55% 2025 5000 4770
St. Joseph Health System Obligated Group,
Certificates of Participation:
5.50% 2014 2000 1944
5.50% 2023 2700 2575
Anaheim Public Financing Authority, Lease Revenue Bonds, (Anaheim
Public Improvements Project), Senior Lease Revenue Bonds,
1997 Series A, FSA Insured, 6.00% 2024 1000 1062
Association of Bay Area Governments Finance Authority For Nonprofit Corp.,
Certificates of Participation (Stanford University Hospital), Series 1993,
5.50% 2013 2000 1952
Castaic Lake Water Agency Financing Corporation,
Refunding Revenue Certificates of Participation
(Water System Improvement Projects), Series 1994A,
MBIA Insured:
7.25% 2010 1245 1488
7.00% 2011 2400 2822
Central Valley Financing Authority, Cogeneration
Project Revenue Bonds (Carson Ice-Gen Project), Series 1993:
6.00% 2009 3750 3805
6.10% 2013 1000 1013
Culver City Redevelopment Financing Authority, 1993
Tax Allocation Refunding Revenue Bonds, AMBAC
Insured, 5.00% 2023 3635 3263
Long Beach Aquarium of the Pacific, Revenue Bonds
(Aquarium of the Pacific Project), 1995 Series A:
6.10% 2010 4000 4019
6.125% 2015 5500 5499
6.125% 2023 13000 12848
City of Los Angeles:
State Building Authority, Lease Revenue Refunding Bonds,
Department of General Services Lease, 1993 Series A:
5.375% 2006 3000 3093
5.50% 2007 7295 7559
Convention and Exhibition Center Authority,
Certificates of Participation:
7.375% 2018 (Prerefunded 1999) 1000 1095
7.00% 2020 (Prerefunded 1999) 2750 2986
Regional Airports Improvement Corp.,
Facilities Lease Refunding Revenue Bonds,
Issue of 1992, United Air Lines, Inc. (Los
Angeles International Airport), 6.875% 2012 2000 2117
Wastewater System Revenue Bonds, Refunding Series 1993 D,
FGIC Insured, 5.20% 2021 2500 2315
Department of Water and Power, Electric Plant Revenue
Bonds, Issue of 1990, 7.10% 2031 (Subject to Crossover
Refunding 2001) 3000 3337
County of Los Angeles:
Capital Asset Leasing Corp., Certificates of
Participation (Marina Del Rey), Series A:
6.25% 2003 5500 5781
6.50% 2008 4750 4948
Metropolitan Transportation Authority,
Proposition C Sales Tax Revenue Bonds,
Second Series 1993B, AMBAC Insured, 5.25% 2023 1300 1205
Transportation Commission, Sales
Tax Revenue Bonds, Series 1989, 7.00% 2019 2000 2143
The Metropolitan Water District of Southern
California, Waterworks General Obligation Refunding
Bonds, 1993 Series A1, 5.50% 2010 3000 3061
Northern California Power Agency, Geothermal
Project #3, Special Revenue Bonds, 1993 Refunding
Series A, 5.60% 2006 3000 3119
County of Orange:
Aliso Viejo Special Tax Bonds
of Community Facilities District No. 88-1,
Series A of 1992:
7.15% 2006 (Prerefunded 2002) 2000 2304
7.35% 2018 (Prerefunded 2002) 10000 11616
Local Transportation Authority,
Measure M Sales Tax Revenue Bonds (Limited Tax Bonds),
Second Senior Bonds, Series 1992, FGIC Insured,
5.90% 2006 1200 1287
Recovery Certificates of
Participation, 1996 Series A, MBIA Insured:
6.00% 2008 5000 5402
6.00% 2010 6220 6689
South Orange County, Public Financing Authority,
Special Tax Revenue Bonds, 1994 Series B (Junior
Lien Bonds):
6.65% 2003 1000 1042
6.75% 2004 2385 2489
Pleasanton Joint Powers Financing Authority,
Reassessment Revenue Bonds, 1993 Series A, 5.70% 2001 490 505
Riverside County Transportation Commission, Sales
Tax Revenue Bonds (Limited Tax Bonds), 1991
Series A, 6.50% 2009 (Prerefunded 2001) 3600 3978
Sacramento City Financing Authority, 1991 Revenue
Bonds, 6.80% 2020 (Prerefunded 2001) 5000 5623
Sacramento Cogeneration Authority, Cogeneration
Project Revenue Bonds:
Procter & Gamble Project, 1995 Series:
6.20% 2006 1000 1052
6.375% 2010 1000 1045
1995 Series:
6.00% 2002 1000 1044
6.00% 2003 2200 2296
Public Facilities Financing Authority of The City of
San Diego, Sewer Revenue Bonds, Series 1993, AMBAC
Insured, 5.00% 2013 1105 1057
San Francisco Bay Area Rapid Transit District,
Sales Tax Revenue Refunding Bonds, Series 1990,
AMBAC Insured, 6.75% 2009 3250 3523
Redevelopment Agency of the City and County of
San Francisco, Refunding Lease Revenue Bonds,
Series 1991 (George R. Moscone Convention
Center), 5.50% 2018 6000 5651
The Regents of the University of California,
Various University of California Projects, 1993:
Series B, 5.375% 2009 2000 2010
Series A, 5.50% 2021 2000 1901
Colorado - 4.22%
Housing And Finance Authority:
Multi-Family Housing Insured
Mortgage Revenue Bonds, 1982 Series A, 9.00% 2025 1780 1794
Single-Family Housing Program Senior and Subordinate Bonds:
1996 Series C-2, 7.10% 2015 3000 3300
1997 Series A-3, 7.00% 2016 1000 1094
Student Obligation Bond Authority, Student Loan Revenue
Bonds, 1994 Series L, 6.00% 2001 1065 1119
Arapahoe County, Capital Improvement Trust Fund
Highway Revenue Bonds (E-470 Project):
6.90% 2015 5750 6311
6.95% 2020 20500 22568
City and County of Denver, Airport System Revenue Bonds,
Series 1992A:
7.25% 2025 (Prerefunded 2002) 5590 6451
7.25% 2025 (Prerefunded 2002) 14210 16398
The Regents of the University of Colorado, Master Lease
Purchase Agreement, Refunding Certificates of
Participation (Telecommunications and Cogeneration
Projects), Series 1996, AMBAC Insured, 6.00% 2005 5000 5351
Connecticut - 1.90%
Health and Educational Facilities Authority Revenue Bonds,
University of Hartford Issue, Series D, 6.75% 2012 2800 2828
Housing Finance Authority, Housing Mortgage Finance Program Bonds,
Subseries B-1, 6.25% 2011 1000 1036
Mashantucket (Western) Pequot Tribe, Special Revenue Bonds,
1996 Series A:
6.25% 2002 2000 2113
6.25% 2003 4000 4229
6.375% 2004 10700 11405
6.50% 2005 3000 3232
6.40% 2011 4000 4160
District of Columbia - 1.89%
General Obligation Bonds:
Series 1990 A, AMBAC Insured, 7.25% 2005
(Prerefunded 2000) 2500 2763
Series 1992 B, MBIA Insured:
6.125% 2003 1750 1876
6.30% 2010 2900 3046
AMBAC Insured, 5.20% 2004 1500 1530
Series 1993 A, AMBAC Insured, 5.875% 2005 3000 3182
Series 1993 B-1, AMBAC Insured, 5.50% 2009 7000 7049
Hospital Revenue Refunding Bonds
(Medlantic Healthcare Group, Inc. Issue):
Series 1992 A, 7.00% 2005 2000 2132
Series 1993 A, MBIA Insured:
6.00% 2011 3765 4009
5.25% 2012 2000 1961
Redevelopment Land Agency, Sports Arena Special Tax Revenue
Bonds, Series 1996, 5.625% 2010 1350 1313
Florida - 1.14%
Arbor Green Community Development District (City of Tampa,
Hillsborough County), Special Assessment Revenue Bonds,
Series 1996, 7.60% 2018 1000 1008
Broward County, Resource Recovery Revenue Bonds,
Series 1984:
North Project, 7.95% 2008 4500 4941
South Project, 7.95% 2008 2155 2364
The Crossing at Fleming Island Community Development
District (Clay County), Special Assessment Bonds,
Series 1995, 8.25% 2016 1125 1211
Mid-Bay Bridge Authority, Revenue Refunding Bonds:
Series 1993D, 6.125% 2022 500 506
Series 1991B, 8.50% 2022 (Subject to Crossover Refunding) 4000 4621
Northern Palm Beach County Improvement District, Water
Control and Improvement Bonds, Unit of Development No. 9A,
Series 1996A:
6.80% 2006 1145 1178
7.30% 2027 1500 1554
Georgia - 1.53%
General Obligation Bonds, 1995 D, 6.75% 2011 3410 3984
Municipal Electric Authority, General Power Revenue Bonds:
1992B Series, 6.50% 2012 1215 1340
CTFS-1992B Series, 6.375% 2016 1000 1084
City of Atlanta:
Airport Facilities Revenue
Refunding Bonds, Series 1994 A, AMBAC Insured,
6.50% 2009 1000 1128
Special Purpose Facilities
Revenue Refunding Bonds (Delta Air Lines, Inc.
Project), Series 1989 A, 7.50% 2019 4500 4784
Fulco Hospital Authority, Revenue Anticipation
Certificates:
St. Joseph's Hospital of Atlanta, Inc.,
Series 1994, 4.80% 2001 2305 2326
Georgia Baptist Health Care System
Project:
Series 1992 A:
6.40% 2007 1000 1040
6.25% 2013 2100 2122
6.375% 2022 1595 1619
Series 1992 B, 6.375% 2022 610 619
Development Authority of Fulton County, Special
Facilities Revenue Bonds (Delta Air Lines, Inc.
Project), Series 1992, 6.95% 2012 3115 3340
Hawaii - 0.13%
City and County of Honolulu, General Obligation Bonds, Refunding
and Improvement Series, 1993B, 5.00% 2013 2000 1927
Illinois - 8.49%
Build Illinois Bonds (Sales Tax Revenue Bonds),
Series O, 6.00% 2002 1000 1068
Civic Center Bonds (Special State Obligation Bonds),
Series 1991, AMBAC Insured, 6.25% 2020 6500 7092
Educational Facilities Authority Revenue
Bonds, Wesleyan University, Series 1993,
5.625% 2018 1490 1457
Health Facilities Authority:
Revenue Bonds, Series 1993:
OSF Healthcare System, 5.75% 2007 6760 6822
Rush-Presbyterian-St. Luke's Medical Center Obligated Group,
MBIA Insured, 5.25% 2020 3000 2747
Refunding Bonds:
Edward Hospital Project, Series 1993 A, 6.00% 2019 1435 1424
Advocate Health Care, Series 1997 A, 5.80% 2016 10000 9936
Revenue and Revenue Refunding Bonds:
Evangelical Hospitals Corporation, Series C,
6.25% 2022 (Escrowed to Maturity) 4000 4454
Lutheran General Health, Series C, 6.00% 2018 2705 2765
Revenue Bonds, Series 1992 (Edward Hospital
Association Project), 7.00% 2022 1000 1065
Revenue Refunding Bonds (Fairview):
Series 1995 A:
6.25% 2001 1105 1115
6.50% 2006 770 772
7.40% 2023 1000 1016
Revenue Bonds, Series 1994 A (Northwestern Memorial
Hospital), 6.00% 2024 2000 2034
Housing Development Authority, Multi-Family Housing Bonds,
1992 Series A, 7.00% 2010 1490 1589
City of Chicago:
General Obligation Bonds, Project and Refunding,
Series 1995B, FGIC Insured, 5.125% 2025 4000 3688
The County of Cook, General Obligation Capital Improvement
Bonds, Series 1996, FGIC Insured:
6.00% 2006 3920 4215
6.50% 2011 4000 4492
Chicago-O'Hare International Airport:
General Airport Second Lien Revenue Refunding Bonds,
1993 Series C, MBIA Insured, 5.00% 2018 10000 9101
Special Facilities Revenue Bonds for United
Air Lines:
1984 Series C, 8.20% 2018 1210 1310
1988 Series B, 8.85% 2018 1900 2154
Special Facilities Revenue Refunding Bonds:
Delta Air Lines, Inc. Terminal, 6.45% 2018 4435 4505
Series 1994 (American Airlines, Inc. Project),
8.20% 2024 2750 3251
Metropolitan Pier and Exposition Authority, McCormick Place
Expansion Project Bonds, Series 1992A, 6.50% 2027
(Prerefunded 2003) 3910 4372
Metropolitan Water Reclamation District of Greater
Chicago, Series B:
Capital Improvement Bonds, 5.25% 2004 5000 5175
Refunding Bonds, 5.30% 2005 5325 5511
Skyway Toll Bridge Refunding Revenue Bonds,
Series 1994:
6.50% 2010 (Prerefunded 2004) 13250 14819
6.75% 2014 (Prerefunded 2004) 6500 7364
Water Revenue Bonds, Refunding
Series 1993, FGIC Insured:
6.50% 2011 4345 4907
5.50% 2025 2565 2318
Regional Transportation Authority, Cook, Du Page,
Kane, Lake, McHenry and Will Counties,
General Obligation Bonds:
Series 1994D, FGIC Insured, 7.75% 2019 4500 5752
Series 1990A, AMBAC Insured, 7.20% 2020 1000 1211
Indiana - 3.04%
Educational Facilities Authority, Educational
Facilities Revenue Bonds (University of Evansville
Project), Series 1996, 5.25% 2005 1000 990
Health Facility Financing Authority, Hospital Revenue Bonds
(Clarian Health Partners, Inc.), Series 1996A, 5.50% 2016 11000 10629
Housing Finance Authority, Single Family Mortgage
Refunding Revenue Bonds, 1992 Series A, 6.75% 2010 1275 1336
State Office Building Commission, Correctional
Facilities Program Revenue Bonds, Series 1995B,
AMBAC Insured, 6.25% 2012 8490 9362
Transportation Finance Authority, Airport
Facilities Lease Revenue Bonds, Series A:
6.50% 2007 3245 3519
6.50% 2007 (Prerefunded 2002) 3755 4174
6.75% 2011 (Prerefunded 2002) 2400 2690
City of East Chicago, Pollution Control Refunding
Revenue Bonds (Inland Steel Co. Project No. 11),
Series 1994, 7.125% 2007 3000 3131
Hospital Authority of the City of Fort Wayne,
Revenue Bonds (Parkview Memorial Hospital, Inc.
Project), Series 1992:
6.375% 2013 6000 6229
6.40% 2022 2000 2063
Indianapolis Local Public Improvement Bond Bank,
Series 1992 D Bonds, 6.60% 2007 1960 2190
Kentucky - 0.25%
Higher Education Student Loan Corp., Insured
Student Loan Revenue Bonds, 1994 Series B,
6.20% 1999 1140 1195
Kenton County Airport Board, Special Facilities
Revenue Bonds (Delta Air Lines, Inc. Project):
Series 1985, 7.80% 2015 1000 1071
1992 Series B, 7.25% 2022 1350 1455
Louisiana - 3.68%
Health Education Authority, Revenue Bonds (Lambeth House Project),
Series 1996, 9.00% 2026 9000 9093
Lake Charles Harbor and Terminal District, Port
Facilities Revenue Refunding Bonds (Trunkline
LNG Co. Project), Series 1992, 7.75% 2022 28000 31844
Offshore Terminal Authority, Deepwater Port
Refunding Revenue Bonds (LOOP INC. Project):
First Stage Series B:
5.40% 1998 3150 3208
6.25% 2004 5600 6030
First Stage Series E:
7.60% 2000 1000 1093
7.45% 2004 1000 1096
Parish of St. Charles, Adjustable/Fixed-Rate
Pollution Control Revenue Bonds (Louisiana
Power & Light Co. Project),
Series 1984, 8.25% 2014 3490 3804
Maine - 0.21%
Housing Authority, Mortgage Purchase
Bonds, 1994 Series C-1, 5.90% 2015 3115 3181
Maryland - 1.69%
Community Development Administration, Department
of Housing and Community Development, Single
Family Program Bonds, 1990 First Series, 7.60% 2017 5920 6179
Health and Higher Educational Facilities Authority:
Revenue Bonds, Howard County General Hospital
Issue, Series 1993:
5.50% 2013 2300 2203
5.50% 2021 6225 5715
Project and Refunding Revenue Bonds:
Mercy Medical Center Issue, Series 1996,
FSA Insured, 6.50% 2013 1155 1298
Peninsula Regional Medical Center Issue, Series 1993,
5.25% 2012 1000 971
Calvert County, Maryland Economic Development
Revenue Bonds (Asbury-Solomons Island Facility),
Series 1995, 8.625% 2024 2500 2762
John Hopkins Hospital Issue, Revenue Refunding
Bonds, Series 1993, 5.00% 2023 3000 2728
Prince George's County, Hospital Revenue Bonds,
Dimensions Health Corp. Issue:
Series 1992, 7.25% 2017 (Prerefunded 2002) 750 859
5.30% 2024 3305 3044
Massachusetts - 2.41%
General Obligation Bonds Consolidated Loan of
1989, Series D, MBIA Insured, 7.00% 2009
(Prerefunded 1999) 1000 1091
Health and Educational Facilities Authority,
Revenue Bonds, Brigham and Women's Hospital Issue,
Series D, 6.75% 2024 7000 7535
Massachusetts Bay Transportation Authority, General
Transportation System Bonds, 1994 Series A
Refunding Bonds, 7.00% 2007 10110 11683
Water Resources Authority:
General Revenue Bonds, 1990 Series A, 7.50% 2009
(Prerefunded 2000) 9500 10565
General Revenue Refunding Bonds, 1993 Series B,
5.25% 2009 2500 2493
City of Boston, Revenue Refunding Bonds,
Boston City Hospital (FHA Insured Mortgage),
7.625% 2021 980 1102
The New England Loan Marketing Corp.,
Student Loan Refunding Bonds:
1992 Series A, 6.50% 2002 1000 1079
1993 Series G, 5.20% 2002 1200 1216
Michigan - 8.28%
State Hospital Finance Authority Hospital Revenue Refunding Bonds:
Daughters of Charity, National Health System, 5.50% 2005 1750 1820
Genesys Health System Obligated Group, Series 1995A:
7.10% 2002 1955 2106
7.20% 2003 1000 1086
8.00% 2005 8880 10066
8.10% 2013 5000 5725
8.125% 2021 4500 5144
7.50% 2027 2925 3194
McLaren Obligated Group, Series 1993A, 5.375% 2013 2985 2825
Sinai Hospital of Greater Detroit, Series 1995:
6.625% 2016 5750 5953
6.70% 2026 1680 1742
Pontiac Osteopathic, Series 1994 A:
6.00% 2014 3500 3433
6.00% 2024 3400 3288
State Housing Development Authority, Rental Housing
Revenue Bonds, 1994 Series A:
6.20% 2003 1600 1677
AMBAC Insured, 6.40% 2005 1850 1987
Job Development Authority, Pollution
Control Revenue Bonds (Chrysler Corp.
Project), Series 1984, 5.70% 1999 7000 7184
City of Detroit:
General Obligation Revenue Bonds (Unlimited Tax):
Series 1995-A, 5.60% 2001 4250 4348
Series 1995-B:
6.25% 2001 6585 6886
6.75% 2003 8675 9359
7.00% 2004 2500 2745
6.25% 2005 3625 3827
6.25% 2008 1730 1803
6.25% 2009 1195 1236
6.25% 2010 1250 1289
Downtown Development Authority,
Tax Increment Bonds (Development Area No. 1 Projects),
Series 1996C:
6.20% 2017 9310 9612
6.25% 2025 4265 4381
Greater Detroit Resource Authority, Resource Recovery
Revenue Refunding Bonds, Series 1996B,
AMBAC Insured, 6.25% 2008 1500 1651
City of Royal Oak Hospital Financing Authority,
Hospital Revenue Refunding Bonds (William Beaumont
Hospital), Series 1993 G, 5.25% 2019 8000 7529
Charter County of Wayne, Special Airport Facilities
Revenue Refunding Bonds (Northwest Airlines, Inc.
Facilities), Series 1995, 6.75% 2015 13985 14370
Minnesota - 0.46%
Housing Finance Agency:
Housing Development Bonds, 1991 Series A, 6.85% 2007 2535 2670
Single Family Mortgage Bonds, 1994 Series E,
Remarketing 3/12/96, 5.60% 2013 2220 2206
Regents of the University of Minnesota, General
Obligations Bonds, Series 1996A, 5.50% 2006 2000 2093
Mississippi - 0.94%
Claiborne County, Adjustable/Fixed-Rate Pollution
Control Revenue Bonds (Middle South Energy, Inc.
Project), Series C, 9.875% 2014 13000 14331
Nevada - 0.10%
City of Henderson, Local Improvement
District No. T-10 (Seven Hills) Limited Obligation
Improvement Bonds, 7.50% 2015 1500 1540
New Hampshire - 0.25%
Business Finance Authority, Pollution Control
Refunding Revenue Bonds (The United Illuminating
Co. Project), Series A 1993, 5.875% 2033 2985 2797
Higher Educational and Health
Facilities Authority Revenue Bonds, Dartmouth
College Issue, Series 1993, 5.375% 2023 1000 959
New Jersey - 1.39%
Economic Development Authority, First
Mortgage Revenue Fixed Rate Bonds:
Fellowship Village Project, Series 1995A, 9.25% 2025 7000 7948
Winchester Gardens at Ward Homestead Project,
Series 1996A:
8.50% 2016 4000 4152
8.625% 2025 3500 3653
Housing and Mortgage Finance Agency,
Section 8 Bonds, 1991 Series A:
6.80% 2005 2570 2760
6.85% 2006 2500 2679
New Mexico - 0.23%
Mortgage Finance Authority, Single Family Mortgage
Purchase Refunding Senior Bonds, 1992 Series
A-1, 6.85% 2010 3290 3434
New York - 12.49%
Dormitory Authority:
State University Educational Facilities Revenue
Refunding Bonds:
Series B, 5.70% 2004 1485 1539
Series 1990 A, 7.50% 2013 3500 4229
Series 1990 B:
7.50% 2011 1720 2016
7.00% 2016 1000 1069
City University System, Consolidated Second
General Resolution Revenue Bonds:
Series 1990 F, FGIC Insured, 7.50% 2020
(Prerefunded 2000) 7100 7948
Series G, 5.00% 2002 2000 2012
Environmental Facilities Corporation, State Water
Pollution Control Revolving Fund Revenue Bonds
(New York City Municipal Water Finance Authority
Project):
Series 1994 A, 5.75% 2009 6000 6355
Series 1991 E, 6.875% 2010 1500 1645
Series 1990 A, 7.50% 2012 500 550
Housing Finance Agency, Health Facilities Revenue Bonds
(New York City), 1996 Series A Refunding, 6.375% 2003 5000 5330
Local Government Assistance Corp.:
Series 1991 A, 7.00% 2016 (Prerefunded 2001) 7000 7827
Series 1991 B, 7.50% 2020 (Prerefunded 2001) 6925 7869
Series 1991 C, 0% 2005 5000 3366
Series 1991 D:
7.00% 2011 2000 2259
7.00% 2018 (Prerefunded 2002) 8650 9798
6.75% 2021 (Prerefunded 2002) 1350 1514
Series 1992 C, 5.50% 2022 1000 957
State Medical Care Facilities Finance Agency:
Mental Health Services Facilities Improvement
Revenue Bonds:
1991 Series A, 7.50% 2021 (Prerefunded 2001) 3645 4124
1994 Series A, 5.10% 2003 1720 1725
Series D, 5.25% 2023 1000 895
St. Luke's-Roosevelt Hospital Center FHA-Insured Mortgage
Revenue Bonds, 1993 Series A, 5.60% 2013 9430 9405
Metropolitan Transit Authority, Transit Facilities
Service Contract Bonds, Series O and P,
5.375% 2002 4000 4094
Urban Development Corp., Correctional
Capital Facilities Revenue Bonds:
Series 1993 A, Refunding Series, 5.30% 2005 2800 2819
Series 2, 6.50% 2021 (Prerefunded 2001) 3700 3990
Battery Park City Authority, Revenue Refunding
Bonds, Series 1993 A:
5.00% 2013 5000 4649
5.25% 2017 2500 2323
4.75% 2019 18000 15479
City of New York, General Obligation Bonds:
Fiscal 1992 Series C, 6.50% 2004 2500 2675
Fiscal 1992 Series H:
6.875% 2002 (Escrowed to Maturity) 285 314
6.875% 2002 1615 1744
Fiscal 1995 Series F:
6.375% 2006 3000 3197
6.60% 2010 2000 2099
6.625% 2025 1500 1562
Fiscal 1993 Series A, 6.25% 2003 2200 2330
Fiscal 1991 Series B, 8.25% 2006 1500 1797
Fiscal 1995 Series E:
6.50% 2004 6550 7018
MBIA Insured, 6.20% 2008 3000 3315
Fiscal 1996 Series E, 6.50% 2006 7500 8058
Fiscal 1996 Series I, 6.50% 2006 8000 8599
Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds:
Fiscal 1989 Series B, FGIC Insured,
7.625% 2017 (Prerefunded 1998) 3000 3190
Fiscal 1991 Series C, 7.75% 2020 (Prerefunded 2001) 5000 5714
Fiscal 1994 Series B:
4.875% 2002 3000 3034
5.50% 2019 2000 1917
Transit Authority, Transit
Facilities Revenue Bonds (Livingston Plaza
Project), Series 1990, FSA Insured, 7.50% 2020
(Prerefunded 2000) 4000 4417
Triborough Bridge and Tunnel Authority, General
Purpose and Revenue Bonds:
Series S, 7.00% 2021 (Prerefunded 2001) 11400 12634
Series Y, 6.00% 2012 1000 1083
North Carolina - 1.55%
Eastern Municipal Power Agency, Power System Revenue
Bonds:
Series 1993 B:
6.00% 2006 3000 3102
7.00% 2008 10045 11175
7.25% 2007 5000 5616
6.00% 2026 1700 1683
Series 1993 C, 5.00% 2021 2300 1993
Ohio - 0.12%
County of Franklin, Hospital Facilities Revenue
Refunding and Improvement Bonds (Doctors Hospital
Project), 5.60% 2006 1750 1841
Oklahoma - 0.82%
State Industrial Authority, Health System
Revenue Refunding Bonds (Obligated Group consisting
of INTEGRIS Baptist Medical Center, Inc., INTEGRIS
South Oklahoma City Hospital Corp. and INTEGRIS
Rural Health, Inc.), AMBAC Insured, Series 1995D:
6.00% 2009 2500 2663
6.00% 2010 4020 4260
Health System Revenue
Bonds, Baptist Medicine Center of Oklahoma,
Series 1995 C, AMBAC Insured, 6.375% 2009 2500 2736
Tulsa Industrial Authority, Hospital Revenue
and Refunding Bonds,
St. John Medical Center Project, Series 1996,
5.375% 2017 3000 2879
Pennsylvania - 5.25%
Convention Center Authority, Refunding
Revenue Bonds, 1994 Series A, 6.25% 2004 10000 10569
Higher Educational Facilities Authority, Revenue
Bonds (Thomas Jefferson University), 1992
Series A, 6.625% 2009 1250 1360
Housing Finance Authority, Single Family Mortgage
Revenue Bonds:
Series 1990-29A, 7.375% 2016 2470 2597
Series 1992-33, 6.85% 2009 1000 1065
Industrial Development Authority,
Economic Development Revenue Bonds, Series 1994,
AMBAC Insured, 7.00% 2007 1750 2037
Hospitals and Higher Education Facilities
Authority of Philadelphia:
Hospital Revenue Bonds (The Children's Hospital of
Philadelphia Project):
Series A of 1992:
6.50% 2009 (Prerefunded 2002) 4500 4970
6.50% 2021 (Prerefunded 2002) 3000 3313
Series A of 1993, 5.00% 2021 8000 7201
Frankford Hospital, Series A:
6.00% 2014 1805 1779
6.00% 2023 4000 3909
Hospital Authority of Philadelphia, Hospital
Revenue Bonds (Temple University Hospital):
Series of 1993 A, 6.50% 2008 15500 16390
Series of 1983, 6.625% 2023 15385 15960
City of Pottsville Hospital Authority, Hospital
Revenue Bonds (The Pottsville Hospital and Warne
Clinic), Series of 1994, 7.25% 2024 8500 8931
Rhode Island - 2.21%
Convention Center Authority, Refunding Revenue
Bonds, MBIA Insured
1993 Series B:
5.00% 2008 2790 2774
5.25% 2015 5660 5495
Depositors Economic Protection Corp., Special
Obligation Bonds:
1993 Series A, MBIA Insured:
5.75% 2012 4850 5075
6.25% 2016 4500 4897
1992 Series A, FSA Insured, 6.625% 2019
(Prerefunded 2002) 1000 1117
1993 Series A:
6.375% 2022 7000 7731
5.75% 2021 (Escrowed to Maturity) 1210 1245
5.75% 2021 2715 2738
Housing and Mortgage Finance Corporation,
Homeownership Opportunity Bonds, Series 3-A,
7.80% 2010 2500 2688
South Dakota - 0.22%
Housing Development Authority,
Homeownership Mortgage Bonds, 1995 Series A and B,
6.00% 2023 1620 1665
City of Sioux Falls, Sales Tax Revenue Bonds, Series 1996B,
AMBAC Insured, 5.50% 2005 1655 1746
Tennessee - 2.32%
Health and Educational Facilities Board of the
Metropolitan Government of Nashville and Davidson
County (Blakeford Project), 9.25% 2024 6600 7229
Memphis-Shelby County Airport Authority, Special
Facilities Revenue Bonds, Refunding Series 1992
(Federal Express Corp.), 6.75% 2012 26375 28161
Texas - 2.61%
National Research Laboratory Commission, General
Obligation Bonds, Series 1990 (Superconducting
Super Collider Project), 7.125% 2020
(Prerefunded 2000) 14450 15913
Dallas-Fort Worth International Airport
Facility Improvement Corp.,
Delta Air Lines, Inc., Revenue Refunding Bonds,
Series 1993, 6.25% 2013 2400 2431
Harris County Health Facilities Development
Corp., SCH Health Care System Revenue Bonds
(Sisters of Charity of the Incarnate Word,
Houston), Series 1991A, 7.10% 2021 8000 8749
Hidalgo County Health Services Corp., Hospital Revenue
Bonds (Mission Hospital, Inc. Project), Series 1996:
7.00% 2008 1000 1056
6.75% 2016 1740 1760
Northside Independent School District (Bexar,
Medina, and Bandera Counties), Unlimited
Tax School Building Bonds, Series 1991, 6.375% 2008
(Prerefunded 2001) 3500 3759
Tomball Hospital Authority, Hospital Revenue
Refunding Bonds, Series 1993, 6.125% 2023 6250 6155
Utah - 1.60%
Housing Finance Agency, Single Family Mortgage
Bonds, 1995 Issue E (Federally Insured or
Guaranteed Mortgage Loans), 5.50% 2024 1630 1653
Intermountain Power Agency:
Special Obligation Refunding Bonds,
5th Crossover Series 1987B:
FGIC Insured, 7.00% 2015 7000 7218
7.20% 2019 1000 1030
1997 Series A, AMBAC Insured, 6.50% 2011* 1435 1599
Salt Lake City, Hospital Revenue Bonds, Series
1992 (IHC Hospitals, Inc.):
5.50% 2021 8100 7792
6.25% 2023 5000 5148
Vermont - 0.02%
Housing Finance Agency, Single Family
Housing Bonds, Series 4, 5.75% 2012 290 293
Virginia - 1.71%
Commonwealth Transportation Board, Commonwealth of
Virginia Transportation Contract Revenue Bonds,
Series 1988 (Route 28 Project), 7.80% 2016
(Prerefunded 1998) 3500 3711
Housing Development Authority, Commonwealth Mortgage
Bonds:
Series D, Subseries D-3, Remarketing 5/30/96:
6.00% 2012 1430 1450
6.00% 2012 1470 1490
6.05% 2013 1510 1531
6.05% 2013 1555 1577
Series D, Subseries D-4, Remarketing 7/16/96:
6.00% 2009 1180 1207
6.00% 2009 1220 1248
6.05% 2010 1255 1286
6.05% 2010 1290 1321
Industrial Development Authority of Fairfax
County, Hospital Revenue Refunding Bonds (Inova
Health System Hospitals Project), Series 1993A:
4.80% 2005 1850 1845
5.00% 2011 1300 1257
5.00% 2023 1200 1097
Industrial Development Authority of the County of
Hanover, Hospital Revenue Bonds (Memorial Regional
Medical Center Project at Hanover Medical Park),
Series 1995, MBIA Insured:
6.50% 2009 1000 1130
6.375% 2018 3000 3294
Industrial Development Authority of the City of
Norfolk, Hospital Revenue Bonds (Sentara
Hospitals-Norfolk Project), Series 1991,
6.50% 2013 2500 2652
Washington - 6.76%
General Obligation, Series B:
5.50% 2010 2000 2059
5.50% 2018 3100 3102
Public Power Supply System:
Nuclear Project No. 1 Refunding Revenue Bonds,
Series 1989A:
7.50% 2015 (Prerefunded 1999) 1820 1992
6.00% 2017 2000 1976
Nuclear Project No. 2 Refunding Revenue Bonds:
Series 1990A, 7.375% 2012 (Prerefunded 2000) 1800 1952
Series 1990C, 7.30% 2000 3850 4077
Series 1992A, 5.90% 2004 4600 4684
Series 1993A, 5.10% 2000 17335 19303
Series 1994A:
6.00% 2007 20000 21216
5.25% 2008 5000 4958
Nuclear Project No. 3 Refunding Revenue Bonds:
BIG Insured, 7.25% 2016 (Prerefunded 1999) 5000 5445
Series 1989 B:
7.25% 2015 (Prerefunded 2000) 5450 5982
FGIC Insured, 7.00% 2005 14400 15557
5.375% 2015 5000 4728
7.125% 2016 5250 6055
Wisconsin - 1.27%
Health and Educational Facilities Authority,
Revenue Bonds:
Children's Hospital Project, Series 1993, FGIC Insured,
5.50% 2006 2000 2089
Medical College of Wisconsin, Series 1993, 5.95% 2015 3000 3011
Housing and Economic Development Authority, Housing
Revenue Bonds, 6.40% 2003 3480 3663
Pollution Control and Industrial Development Revenue
Bonds (General Motors Corp. Projects), City
of Janesville, Series 1984, 5.55% 2009 3000 3007
Public Power Incorporated System,
Power Supply System Revenue Bonds, Series
1990 A, AMBAC Insured, 7.40% 2020
(Prerefunded 2000) 500 557
City of Superior, Limited Obligation
Refunding Revenue Bonds (Midwest Energy Resources
Co. Project), Series E-1991 (Collateralized),
FGIC Insured, 6.90% 2021 6000 7080
Wyoming - 0.10%
Community Development Authority, Single Family
Mortgage Bonds, 1989 Series A, 7.90% 2017 450 466
Student Loan Corp., Student Loan Revenue
Refunding Bonds, Series 1991, 6.25% 1999 950 995
Guam - 0.20%
General Obligation Bonds, 1995 Series A, 5.625% 2002 3000 3032
-----------
1453745
-----------
Tax-Exempt Securities Maturing in
One Year or Less - 4.49%
State of California, 1996-97 Revenue Anticipation Notes,
Series A, 4.50% 6/30/97 2450 2458
State of Colorado, General Fund Tax and Revenue
Anticipation Notes, Series 1996A, 4.50% 6/27/97 15500 15549
Harris County Toll Road, Unlimited Tax and
10.375% 2014 (Prerefunded 1998) 1000 1060
State of Kentucky, Turnpike Authority, Resource Recovery
Road Revenue Refunding Bonds, 1981 Series A, 13.125% 2009
(Prerefunded 1997) 390 402
County of Los Angeles, California 1996-97 Tax and Revenue
Anticipation Notes, Series A, 4.50% 6/30/97 14750 14798
Subordinate Lien Revenue Bonds, Series 1984,
State of Maine, General Obligation Tax
Anticipation Notes, 4.50% 6/27/97 1000 1003
State of Michigan, Full Faith and Credit General Obligation Notes,
4.50% 9/30/97 6350 6390
City of Saint Paul, Housing and Redevelopment Authority,
Hospital Facility Revenue Bonds (Healtheast Project),
Series 1987-B:
9.75% 2017 (Subject to Crossover Prerefunding 1997) 4575 4838
9.75% 2017 (Subject to Crossover Prerefunding 1997) 2695 2850
State of Arizona, Salt River Project Agricultural Improvement and
Power District, Electric System Revenue Bonds,
Refunding Series A, 7.875% 2028 (Prerefunded 1998) 1000 1055
State of Texas, Tax and Revenue Anticipation Notes,
Series 1996, 4.75% 8/29/97 13850 13931
The Regents of the University of California,
Revenue Bonds, Series A, MBIA Insured, 6.90% 2015
(Prerefunded 1997) 2750 2852
State of Wisconsin, Operating Notes of 1996, 4.50% 6/16/97 1200 1204
-----------
68390
-----------
TOTAL TAX-EXEMPT SECURITIES (cost: $1,429,747,000) 1522135
Excess of cash and receivables over payables 2518
-----------
NET ASSETS $1,524,653
======
*Represents a when-issued security.
See Notes to Financial Statements
</TABLE>
<TABLE>
The Tax-Exempt Bond Fund of America
Financial Statements
Statement of Assets and Liabilities
at February 28, 1997 (dollars in thousands) (Unaudited)
<S> <C> <C>
Assets:
Tax-exempt securities (cost: $1,429,747) $1,522,135
Cash 936
Receivables for--
Sales of investments $ 1,205
Sales of fund's shares 1,398
Accrued interest 23,127 25,730
---------- -----------
1,548,801
Liabilities:
Payables for--
Purchases of investments 19,067
Repurchases of fund's shares 1,086
Dividends payable 2,735
Management services 444
Accrued expenses 816 24,148
---------- -----------
Net Assets at February 28, 1997--
Equivalent to $12.11 per share on
125,951,076 shares of $1 par value
capital stock outstanding (authorized
capital stock--200,000,000 shares) $1,524,653
===========
Statement of Operations
For the six months ended February 28, 1997 (Unaudited)
(dollars in thousands)
Investment Income:
Income:
Interest on tax-exempt securities $ 45,099
Expenses:
Management services fee $ 2,744
Distribution expenses 1,756
Transfer agent fee 243
Reports to shareholders 116
Registration statement and prospectus 107
Postage, stationery and supplies 101
Directors' fees 11
Auditing and legal fees 38
Custodian fee 30
Taxes other than federal income tax 23
Other expenses 11
----------- 5,180
-----------
Net investment income 39,919
-----------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 2,104
Net unrealized appreciation on investments:
Beginning of period 59,520
End of period 92,388
----------
Net increase in unrealized appreciation
on investments 32,868
-----------
Net realized gain and increase in
unrealized appreciation on investments 34,972
-----------
Net Increase in Net Assets Resulting
from Operations $74,891
===========
Statement of Changes in Net Assets
(dollars in thousands)
Six Months Year
Ended Ended
February 28, August 31,
1997* 1996
----------- -----------
Operations:
Net investment income $ 39,919 $ 79,143
Net realized gain on investments 2,104 7,208
Net increase in unrealized appreciation
(depreciation) on investments 32,868 (7,326)
----------- -----------
Net increase in net assets
resulting from operations 74,891 79,025
----------- -----------
Dividends and Distributions Paid to
Shareholders:
Dividends from net investment income (40,205) (79,078)
Distributions from net realized gain on
investments (4,359) (10,310)
----------- -----------
Total dividends and distributions (44,564) (89,388)
----------- -----------
Capital Share Transactions:
Proceeds from shares sold:
8,718,709 and 24,816,640
shares, respectively 105,085 298,087
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on investments:
2,331,280 and 4,705,048 shares,
respectively 28,032 56,559
Cost of shares repurchased:
9,535,653 and 24,383,250
shares, respectively (114,753) (292,301)
----------- -----------
Net increase in net assets
resulting from capital share
transactions 18,364 62,345
----------- -----------
Total Increase in Net Assets 48,691 51,982
Net Assets:
Beginning of period 1,475,962 1,423,980
----------- -----------
End of period $1,524,653 $1,475,962
=========== ===========
*Unaudited
See Notes to Financial Statements
</TABLE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. The Tax-Exempt Bond Fund of America, Inc. (the "fund") is registered under
the Investment Company Act of 1940 as an open-end, diversified management
investment company. The fund seeks a high level of federally tax-free current
income, consistent with preservation of capital, through a diversified
portfolio of municipal bonds. The following paragraphs summarize the
significant accounting policies consistently followed by the fund in the
preparation of its financial statements:
Tax-exempt securities with original or remaining maturities in excess of
60 days are valued at prices obtained from a national municipal bond pricing
service. The pricing service takes into account various factors such as
quality, yield and maturity of tax-exempt securities comparable to those held
by the fund, as well as actual bid and asked prices on a particular day.
Securities for which pricing service values are not available are valued at the
mean of their quoted bid and asked prices. However, in circumstances where the
investment adviser deems it appropriate to do so, securities will be valued at
the mean of their representative quoted bid and asked prices, or, if such
prices are not available, at the mean of such prices for securities of
comparable maturity, quality and type. Securities for which market quotations
are not readily available are valued at fair value by the Board of Directors or
a committee thereof. All securities with 60 days or less to maturity are valued
at amortized cost, which approximates market value.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. In the event
the fund purchases securities on a delayed delivery or "when-issued" basis, it
will segregate with its custodian liquid assets in an amount sufficient to meet
its payment obligations in these transactions. Realized gains and losses from
securities transactions are reported on an identified cost basis. Interest
income is reported on the accrual basis. Premiums and original issue discounts
on securities purchased are amortized over the life of the respective
securities. Amortization of market discounts on securities is recognized upon
disposition, subject to applicable tax requirements. Dividends are declared
daily after the determination of the fund's net investment income and paid to
shareholders monthly.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $30,000 includes no amounts paid by these credits.
2. It is the fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net investment income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision is
required.
As of February 28, 1997, net unrealized appreciation on investments for
book and federal income tax purposes aggregated $92,388,000, of which
$93,881,000 related to appreciated securities and $1,493,000 related to
depreciated securities. There was no difference between book and tax realized
gains on securities transactions for the six months ended February 28, 1997.
The cost of portfolio securities for book and federal income tax purposes was
$1,429,747,000 at February 28, 1997.
3. The fee of $2,744,000 for management services was paid pursuant to an
agreement with Capital Research and Management Company (CRMC), with which
certain officers and Directors of the fund are affiliated. The Investment
Advisory and Service Agreement provides for monthly fees, accrued daily, based
on an annual rate of 0.30% of the first $60 million of average net assets;
0.21% of such assets in excess of $60 million but not exceeding $1 billion;
0.18% of such assets in excess of $1 billion but not exceeding $3 billion; and
0.16% of such assets in excess of $3 billion; plus 3.00% on the first
$3,333,333 of the fund's monthly gross investment income; 2.50% of such income
in excess of $3,333,333 but not exceeding $8,333,333; and 2.25% of such income
in excess of $8,333,333.
Pursuant to a Plan of Distribution, the fund may expend up to 0.25% of its
average net assets annually for any activities primarily intended to result in
sales of fund shares, provided the categories of expenses for which
reimbursement is made are approved by the fund's Board of Directors. Fund
expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts. During the six months ended February 28,
1997, distribution expenses under the Plan were $1,756,000. As of February 28,
1997, accrued and unpaid distribution expenses were $741,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $243,000. American Funds Distributors, Inc. (AFD), the principal
underwriter of the fund's shares, received $290,000 (after allowances to
dealers) as its portion of the sales charges paid by purchasers of the fund's
shares. Such sales charges are not an expense of the fund and, hence, are not
reflected in the accompanying statement of operations.
Directors who are unaffiliated with CRMC may elect to defer part or all of
the fees earned for services as members of the Board. Amounts deferred are not
funded and are general unsecured liabilities of the fund. As of February 28,
1997, aggregate amounts deferred and earnings thereon were $36,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both
wholly owned subsidiaries of CRMC. Certain Directors and officers of the fund
are or may be considered to be affiliated with CRMC, AFS and AFD. No such
persons received any remuneration directly from the fund.
4. As of February 28, 1997, accumulated undistributed net realized gain on
investments was $1,833,000 and additional paid-in capital was $1,304,485,000.
The fund made purchases and sales of investment securities of
$152,735,000 and $127,520,000, respectively, during the six months ended
February 28, 1997.
<TABLE>
PER-SHARE DATA AND RATIOS
Year Ended August 31
Six Months
Ended
February 28,
1997 /1/ 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $11.86 $11.94 $11.65 $12.43 $11.78 $11.30
------- ------- ------- ------- ------- -------
Income from Investment
Operations:
Net investment income .32 .64 .68 .67 .68 .70
Net realized and
unrealized gain
(loss) on investments .28 .01 .29 (.69) .73 .48
------- ------- ------- ------- ------- -------
Total income from
investment operations .60 .65 .97 (.02) 1.41 1.18
------- ------- ------- ------- ------- -------
Less Distributions:
Dividends from net
investment income (.32) (.64) (.68) (.68) (.68) (.70)
Distributions from net
realized gains (.03) (.09) - (.08) (.08) -
------- ------- ------- ------- ------- -------
Total distributions (.35) (.73) (.68) (.76) (.76) (.70)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period $12.11 $11.86 $11.94 $11.65 $12.43 $11.78
======= ======= ======= ======= ======= =======
Total Return /2/ 5.16% /3/ 5.51% 8.70% (.14)% 12.42% 10.80%
Ratios/Supplemental Data:
Net assets, end of period
(in millions) $1,525 $1,476 $1,424 $1,385 $1,327 $921
Ratio of expenses to average
net assets .34% /3/ .68% .66% .69% .71% .71%
Ratio of net income to
average net assets 2.65% /3/ 5.35% 5.87% 5.53% 5.62% 6.04%
Portfolio turnover rate 8.84% /3/ 26.89% 49.28% 22.40% 15.55% 17.22%
/1/ Unaudited
/2/ Calculated without deducting a sales charge. The maximum sales charge
is 4.75% of the fund's offering price.
/3/ Based on operations for the period shown and, accordingly, not representative
of a full year's operations.
</TABLE>
OFFICES OF THE FUND AND
OF THE INVESTMENT ADVISER,
CAPITAL RESEARCH AND
MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5804
TRANSFER AGENT FOR
SHAREHOLDER ACCOUNTS
(Please write to the address nearest you.)
American Funds Service Company
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071-2371
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR FINANCIAL ADVISER. YOU MAY ALSO CALL AMERICAN FUNDS SERVICE
COMPANY, TOLL-FREE, AT 800/421-0180 OR VISIT WWW.AMERICANFUNDS.COM ON THE WORLD
WIDE WEB.
This report is for the information of shareholders of The Tax-Exempt Bond Fund
of America, but it may also be used as sales literature when preceded or
accompanied by the current prospectus, which gives details about charges,
expenses, investment objectives and operating policies of the fund. If used as
sales material after June 30, 1997, this report must be accompanied by an
American Funds Group Statistical Update for the most recently completed
calendar quarter.
Litho in USA BDA/ALI/3389
Lit. No. TEBF-013-0497
[The American Funds Group(r)]
Printed on recycled paper
